PSI launched, rush to push reforms

With the launch of a massive restructuring scheme aimed at writing 107 billion euros off the country?s debt under way, Prime Minister Lucas Papademos reminded his ministers Friday that much more remains to be done before a scheduled European Union summit next Thursday and Friday if Greece is to secure the 130 billion euros in loans that foreign creditors have pledged as part of a second bailout.

?A titanic effort has been made… to ensure financial support for the country,? Papademos said after a cabinet meeting that approved the official launch of the debt swap, known as PSI (denoting private sector involvement). But the premier stressed that another crucial piece of legislation — which details the implementation of austerity measures and reforms that already have been voted through Parliament and imposes another 3.2 billion euros in additional measures including cuts to pensions — must be approved. That bill is due to be voted on on Wednesday.

During the cabinet meeting, which chiefly focused on the PSI, ministers announced a series of amendments — one relating to the recapitalization of banks, another aimed at guaranteeing the absolute independence of the Hellenic Statistical Authority (ELSTAT) and a third that will ensure that social welfare benefits are not affected by the 22 percent reduction to the minimum wage which is to come into effect on March 1.

The premier also reminded the Cabinet that a series of ministerial decisions and circulars related to so-called ?prior actions? demanded by creditors must be issued by next Wednesday, ahead of an EU summit. The summit is to be prefaced on Thursday morning by a brief meeting of eurozone finance ministers who will consider Greece?s situation.

Meanwhile, Friday German Finance Minister Wolfgang Schaeuble urged lawmakers in Berlin to support the new Greek debt deal when it goes to a vote in the German parliament on Monday. But he said that he could not rule out the possibility of Greece needing a third bailout in the future.

?There are no guarantees that the road we have taken will lead to success,? Schaeuble said in a letter to German MPs, adding that ?it may not be the last time the Bundestag has to deal with financial aid to Greece.?